The Organisation for Economic Co-operation and Development (OECD) has raised its GDP growth forecasts for Hungary in its biannual Economic Outlook released on Tuesday, according to a summary by Hungarian news agency MTI.
The OECD raised its forecast for this year to 3.9%, up from 3.8% in the previous Economic Outlook released in June. It also raised its forecast for 2018 growth to 3.6%, up from 3.4%.
The OECD forecast GDP growth in 2019 at 2.8%.
The OECD said Hungaryʼs economic growth will continue to rely on domestic demand. Public infrastructure spending will benefit from European Union funding and business investment from cheap credit, it added.
Home subsidies will further boost the construction sector, the OECD said, while higher real wages and employment will support the continued growth of private consumption. Inflation could be pushed "towards 4%" by the end of 2019, it added.
Scaling back the governmentʼs fostered work program at a faster pace could ease the labor market shortage as well as inflationary pressures, while public infrastructure and business investments could boost productivity more than expected, preserving external competitiveness, the OECD observed.
"On the other hand, a rise in geopolitical tensions would reduce European growth with a negative impact on Hungarian exports," it added.
In a statement released after the OECD published its latest Economic Outlook, the Ministry for National Economy noted that international organizations, analysts, ratings agencies and investors have all acknowledged the achievements and positive outlook of the Hungarian economy.
"The government will continue its economic policy based on raising wages, reducing taxes and strengthening competitiveness," it added.